If you’ve noticed an uptick in engagement announcements on Facebook recently, it’s not all in your head — engagement season is a real thing.
But if you’re thinking about proposing to your own partner, you’ll want to make sure you’ve talked through the practical side of things first.
“You’ll want to have really good, open communication about where you currently are financially and what your financial goals are,” says Mikel Van Cleve, certified financial planner and director of personal finance advice at USAA. “It’s really important that both individuals come together and be on the same page in order to avoid conflict later down the road.”
While money conversations aren’t the most romantic, they must happen. After all, arguments about money can turn into bigger issues and end in divorce. So before you and your partner take the next step, talk through these eight topics.
What is your money philosophy?
Before getting into the details of joint bank accounts and estate planning, start by understanding the financial background of your partner, says Andy Smith, certified financial planner and financial adviser at the Mutual Fund Store: “Start talking about your backgrounds, where you’re coming from. Try to get a sense of how the other person approaches money.”
You’ll want to find out how they feel about money and its purpose in life. A good place to start: What did your parents teach you about spending, saving, philanthropy?
What is your financial background?
It’s important not only to understand what your partner thinks about spending and saving, but how they arrived at those conclusions. Was money tight when they were growing up? Had they been deceived about money in a prior relationship? Has handling money been an issue for them in the past?
“If you get those stories back and forth, often it’s easier for partners to understand one another,” says Michael McNulty, a Ph.D. at The Chicago Relationship Center and Master Trainer with The Gottman Institute.
McNulty gives the example of a minister’s daughter who grew up with very little and was made fun of by her classmates for the way she dressed. Once she was out on her own, she developed an interest in fashion and started purchasing more expensive clothing to counterbalance the issues she dealt with as a child. She conflated dressing nicely with doing well in life and feeling connected to others, McNulty explained. But to her money-conscious husband, her spending just seemed irresponsible. Only once she opened up about her history was her husband able to understand and compromise on a higher clothing budget.
Should we get a prenup?
“To people who are considering marriage, I highly recommend a prenuptial agreement,” Katie Gampietro Burke, CFP at Wealth by Empowerment, says. “Unfortunately, most marriages end in divorce. So why not have that conversation when you can have the conversation? Not necessarily who’s going to get the house, but the financial side of things.”
If prenup talk seems like too loaded of a conversation to have before the wedding, Burke suggests discussing a post-nuptial agreement instead, where couples create the document together after they’re already married. It serves the same purpose as a prenup, but allows the couple to discuss their options without the pressure of their impending wedding.
Even if they decide against getting a prenup, it’s smart for couples to at least have the conversation.
What are your financial goals?
Just because you may now have two incomes doesn’t mean you can afford everything you want. “There are some needs and wants that are more equal than others,” Smith told Business Insider.
Whether it’s paying for frequent vacations or owning nice cars, your values won’t always match up. Draft independent lists of your wants and needs so you can spot potential conflicts before they arise.
Once you’re married, you’ll want to revisit the financial goals you talked about, make them more specific and detailed by writing them down, and establish a finish line. Be realistic when setting a time frame, but at the same time, think big and don’t be afraid to challenge yourself. But for now, getting a general idea of what your partner wants to achieve with their money is an excellent start.
What are your life goals?
Does one partner plan on staying home with the kids for a period of time? What are you hoping to accomplish in the short term, and where do you want to end up 20 years from now? Do you want to travel? You may not have a clear timeline sketched out in your head, but the earlier you start talking about your ideas for the future, the more likely you are to achieve what you want.
When thinking about bigger purchases the two of you hope to make later on, it’s smart to bring up credit score. You don’t want there to be any unpleasant surprises when you and your partner go to a mortgage company to get pre-approved, for example, and you’re rejected because one of you has terrible credit.
To buy a home, you’ll need a credit score of about 640, explains Bill Liatsis, CEO and co-founder of online loan platform CreditIQ, and it would take about two years to get your score up about 200 points. “If one person has a lower score, you have to be aware of that,” he explains. “Credit score has a big bearing on what that couple may be able to accomplish as a family in the future.”
How will you spend, day-to-day?
If you don’t currently have a budget, now is a good time to start putting that together, advises Van Cleve: “You’ll want to really take a look at how your finances merge together. What will income look like now? What are expenses going to look like? What expenses are you going to pay for? What expenses am I going to pay for? How are we going to share those obligations together?”
Take a “big picture” approach to your joint budget before you’re married — discuss the basics, like whether you can afford your home, how much money you’ll be able to put towards your wedding, and how you’ll achieve your financial and life goals.
Once you’re married, you can craft a more detailed budget that accounts for your day-to-day expenses. When that time comes, don’t just set and forget about your joint budget — revisit it every month, Van Cleve suggests, and make adjustments if needed. This monthly check-in is also a good time to talk about long-term financial goals: “It’s a great time to really reassess what those overall financial goals are and get a plan in place. A plan can mean different things to different folks, but it’s really just establishing your goals, deciding when you want to accomplish them by, and how long it is going to take.”
When do you want to retire?
If you’re getting married at 30, retirement might seem like a lifetime away. But it could be closer than you think, especially if your spouse is covertly vying for early retirement.
“Some persons might want to retire when they’re 50 and some might want to retire when they’re 70 — or never retire,” Burke says.
Finding out why your future spouse wants to retire at a certain age can reveal deeper goals or fears they have. Are they scared of running out of money in retirement and want to work forever? Do they want to retire early so they travel the world? You might be able to adjust your spending and saving goals to find compromises that work for both of you.
What are your assets and liabilities?
Once you’ve talked about the big picture, it’s time to lay out the facts — all of them. “You don’t want any surprises,” says Van Cleve. Whether you’ve got student loans or a trust fund you never told your partner about, it’s time to come completely clean and make sure your partner knows exactly what’s in your name in case something happens to you.
Here are some essential issues that should be covered:
1. Saving accounts: By the time they get married, individuals may have one or two old 401(k) accounts from prior jobs, a current 401(k) or IRA account, and other accounts created for them by their parents. Consider sitting down with a financial adviser who can go through all of the accounts in your name and determine what needs to happen with them, and make sure your partner has a clear understanding of them in case something happens to you.
2. Beneficiaries: For every existing 401(k), IRA, or investment account, individuals will have already listed a beneficiary in the event of their demise. “Now that you’re coming together as a couple,” Smith says, “you’re going to need to rethink those beneficiaries based on what’s appropriate for your particular situation.”
3. Debt: If either person in the relationship has a good amount of debt, it’s important to be open and honest about the entire situation, says Van Cleve: “Then, you can begin to put a plan together, by first committing to not adding any more debt and then deciding how to start attacking that debt and pay it down.”
Once you’ve identified your individual assets, write everything down and keep it in a place where your partner can find it. Include login information, phone numbers, and anything else they would need to access those assets.
Kathleen Elkins contributed to a previous version of this article.